How to Start an LLC in Indiana

The first step to register a new business in Indiana (IN) is to decide on a corporate structure. While Indiana's corporate income tax aligns with the national average, its individual income tax is one of the lowest in the country, making it a particularly ideal state to start a limited liability company (LLC). An Indiana LLC benefits from the same liability protection as a corporation but with more flexibility in management structure and tax options because an LLC can choose to file as a corporation or as a sole proprietor/partnership.

How to get an LLC in Indiana in 6 steps

To officially register your LLC in Indiana, you need to file articles of organization with the Indiana Secretary of State (SOS). However, there are a few essential components to gather before you can file. The first thing you need is a unique business name.

1. Name your Indiana LLC

Before you can officially register your LLC, Indiana law requires you to choose a name that's distinct from any other limited liability company in the state. It's fairly simple to confirm this by conducting an Indiana business search through the Indiana Secretary of State (SOS) website.

You'll also need to confirm your business name aligns with the following Indiana LLC naming guidelines:

• Distinguishability. Any new business formed in Indiana must be distinguishable from existing businesses with the same business structure. This ensures that customers can easily distinguish between your LLC and others in the state.
• Business entity designations. The name of your LLC must include the world limited liability company or another variation, such as LLC or L.L.C.
• Prohibited terms. Without special approval from the state, your LLC name can't contain prohibited terms such as bank, insurance, trust, or any name that implies affiliation with a government agency.

Once you've landed on a name for your business, you may want to reserve it by filing a $20 name reservation through the Secretary of State by mail or online for a small processing fee. Reserving your business name allows you to hold it for up to 120 days and confirms that it's available before you go through the effort of filing your articles of organization.

2. Choose your registered agent 

All business entities in Indiana must maintain a registered agent and a registered office in the state. A registered agent is a person or entity responsible for receiving important legal and tax documents—such as service of process or notices—on behalf of your LLC.

An Indiana registered agent needs to comply with the following requirements:

• The registered agent resides in Indiana, and their business office is the registered office.
• The registered office must be a street address in IN or a P.O. Box number accompanied by a rural route reference.

An LLC can't act as its own registered agent in Indiana, but a member or an employee can. That said, most businesses prefer to hire a professional registered agent service to save themselves the time and legal responsibility. Registered agent service fees range anywhere from $100 to $500 per year. LegalZoom offers these services for $249 per year.

3. Prepare and file articles of organization

Once you have a name and registered agent for your LLC, you're ready to file articles of organization and officially register your business with the state. Articles of organization cost $100 to file for a domestic LLC in Indiana by mail or $95 to file online, plus a small online processing fee.

You can file online by creating an INBiz account—the Secretary of State's business filing database—or mail your articles to 302 W. Washington St., Room E-018, Indianapolis, IN 46204. If you decide to mail your articles, make sure you use 8-½-inch by 11-inch white paper and print or type in ink.

An IN articles of organization for a domestic LLC typically includes the following information:

• LLC's name and phone number
• Email and physical address of your business
• Name and address of your Indiana registered agent
• Duration of your LLC, which may be perpetual if there's no intended end date
• Management structure (whether member-managed or a single-member LLC)
• Signature

Once the IN SOS files and approves your formation documents, they'll issue you a certificate that confirms your LLC formally exists. This certificate allows your business to obtain an employer identification number (EIN) from the Internal Revenue Service (IRS), business licenses, and business bank account.

4. Create an operating agreement

An operating agreement is a document that outlines the way your LLC will conduct business, including ownership structure, roles, and operational procedures. Indiana doesn't require LLCs to file an operating agreement, but it’s an essential component that establishes the policies and procedures for your business.

Having a readily accessible, written operating agreement can be especially helpful when settling financial disputes or other potential litigation that may arise. Without an agreement in place, courts typically base settlement decisions on state law, which might not be in the best interest of your LLC and its members.

An IN LLC operating agreement can include, but isn’t limited to, the following:

• LLC's name and principal address
• LLC's members' percentage interests in the LLC
• LLC's members' rights and responsibilities
• LLC's member's voting powers
• Rules for holding meetings and taking votes
• Duration of the LLC
• Name and address of the registered agent
• Information about the certificate of organization
• Purpose of the business
• Members and their contribution
• The way profits and losses will be divided
• Procedure for admitting new members, as well as outgoing members
• Management of the LLC
• Indemnification and liability clauses

The cost of drafting an LLC operating agreement varies. It's free to write yourself, but companies often choose to draft one with the help of a business attorney, as the contents of the document can impact litigation decisions. LegalZoom’s operating agreement drafting service is $99.

5. Get an employer identification number and open a business bank account

The nine-digit employer identification number (EIN) allows the Internal Revenue Service to identify your LLC for taxes. You can obtain your EIN by mail or online through the IRS.

The purpose of an EIN is to allow you to do the following:

• File and pay federal income tax.
• File and pay state and local income tax.
• Open a business bank account.
• Hire employees.

LegalZoom also offers an EIN application service for $79 that can save you time and effort by letting us help you fill out the application and file with the IRS for you. We'll help ensure your application is filled out correctly and send you your EIN and official documentation once it’s approved. 

A business bank account is essential for LLC owners to separate their business spending from their personal spending and protect their limited liability status. Business bank accounts also have other benefits, such as protecting personal assets, reducing the risk of audits, and simplifying bookkeeping.

6. Register for state taxes and get business licenses

Depending on the nature of your business, you may need to register for state sales, use, and income taxes with the Indiana Department of Revenue (DOR). Fortunately, the DOR uses a single application (Form BT-1) to register for a number of taxes, including sales tax, withholding tax, and food & beverage tax.

For example, you need a Retail Merchants Certificate if you plan to sell goods in IN, which you can apply for through Form BT-1 for a $25 fee. This certificate essentially provides your business with a tax ID—or tax-exempt—number. Indiana’s flat sales tax rate of 7% is another perk for retail businesses in the state.

Additionally, your LLC may need other industry-specific licenses or permits to legally operate in Indiana. With over 400 different licenses, permits, certifications, and other permissions depending on the type of business, the Indiana Professional Licensing Agency is a great source to locate the right license based on your profession.

Regardless of the industry, Indiana requires all businesses to file business tangible personal property forms annually with the assessor’s office, even if your LLC qualifies for an exemption. Think of business tangible personal property as the value of all property that your business uses, excluding real estate, such as equipment or computer software.

Next steps after forming your Indiana LLC

Once you've filed all the documents that your LLC needs to legally operate in Indiana, there are a few other steps you should consider to ensure your new business is seen and thrives in the modern market.

Register a domain name

Even if you don't think you'll need a webpage, you probably will. At the very least, you should reserve the option of having one in the future by buying your domain name now. Before finalizing your LLC name, it's a good idea to check if the URL is available. Having a domain that matches your business name will make it easier for prospective clients to find your business online and can help to build credibility.

Obtain a certificate of good standing

Once you've officially registered your limited liability company, you may want to order a certificate of good standing, also called a certificate of existence in Indiana. You're not required to have this document, but it proves to potential partners, investors, lenders, employers, and customers that your business legally exists and has authorization to operate in Indiana. You can order this certificate from the SOS by mail or through INBiz for a $26 filing fee plus an online processing fee.

You can also use LegalZoom's Certificate of Good Standing service for $45, and we'll file for you and deliver it once we've received it from the state.

Consider a foreign LLC

Registering a domestic LLC in Indiana only authorizes you to legally operate within the state. A foreign LLC refers to an entity that registers to do business in a state other than the one where it was formed.

If your business is booming and you believe it could benefit from expanding into another state, consider registering it as a foreign LLC. The cost of registering a foreign LLC will vary from state to state, but it may be worth the effort to widen your customer base. To create a foreign LLC in IN, submit a Foreign Registration Statement online or by mail. The filing fee is $125 by mail or $105 online, plus a small online processing fee.

Compliance requirements for Indiana LLCs

Registering your LLC gives you a legal foundation to conduct business. Plan to keep your LLC compliant and in active status on the state's website.

This might include making quarterly tax payments. All Indiana LLCs must file a business entity report with the Secretary of State every two years. The report is due every other year within the anniversary month of the LLC's formation. The filing fee is $32 online or $50 by mail. You also need to maintain a registered agent for your business.

In addition to the biennial business entity report, LLCs need to file state and local taxes. The amount of taxes you pay will depend on factors like how you choose to file (as an individual or a corporation), local tax rates, and business-related taxes, such as sales tax.

When paying taxes, a single-member LLC files similarly to a sole proprietor, and a multi-member LLC files as a partnership by default. Both are considered "pass-through" entities. This means that rather than paying corporate taxes, you report your gains and losses on your individual tax returns. However, you can file with the IRS to pay taxes as a corporation instead. Indiana's state income tax rate is 3.05% for individuals and 4.9% for corporations.

The cost of forming an LLC in Indiana

The complete cost of forming an LLC in Indiana varies based on the scope of your business, its industry, and total operating cost. That said, it's helpful to form a clear picture of the basic costs every LLC will encounter in the state. Keep in mind that all online transactions through INBiz take on an additional processing fee of a minimum of $1 but no more than 2.15%.

• Formation cost: To file the articles of organization costs $95 online, $100 by mail.
• Name reservation: $20
• Biennial business entity report cost: $32 online or $50 by mail, due within the anniversary month of your LLC.
• Certificate of good standing: $26
• Retail Merchants Certificate: $25
• Workers’ compensation insurance: About $0.60 per $100 of payroll, required if you have employees
• Registered agent service: $100 to $500 per year on average
• Operating agreement: $100 to $750 on average
• Website domain: $10 to $45 per year on average

These are just the basic fees for starting an LLC in IN. Formation costs will vary based on operational costs and the price of industry-specific business licenses and insurance. That said, the minimum start-up cost for forming an LLC in Indiana is around $221 with only the basic legal costs. If you include additional services to make your LLC formation easier, the cost could be a little closer to $560.

How to start your Indiana LLC with LegalZoom

Indiana offers many online services to streamline business formation and maintenance, but the process contains a lot of moving parts and requires strong attention to detail. For this reason, LegalZoom has created streamlined LLC formation packages to further simplify the process while helping to ensure compliance with state laws.

The LegalZoom process takes only three steps.

1. Complete our LLC questionnaire

Take a few minutes to fill out a simple questionnaire. Tell us whether you want to form a new LLC or convert an existing partnership or sole proprietorship into an LLC and which personal liability protection provisions you want to include.

2. We apply for your LLC

After you’ve given us all of the important information about your new business, we compile your documents and file them with the Indiana Secretary of State and Department of Revenue. Then, we’ll file the required licenses or permits and create an LLC operating agreement tailored to your specifications.

3. Receive confirmation

Once the SOS processes and confirms your documents, we’ll send you your finished articles of organization, business registration certificate, other relevant documents, and actionable instructions on the next steps to ensure your LLC’s success.

FAQs

What are the benefits of registering an Indiana LLC?

Indiana's low individual income tax, low formation costs, and flat sales tax rate are some of the benefits of forming your LLC in Indiana. A registered LLC also makes it possible for you to do the following:

• Open a business bank account.
• Apply for a business credit card.
• Purchase insurance for your business.
• Protect your name and logo with a trademark.

How long does it take to form an LLC in Indiana?

It depends on whether you file online, in person, or by mail. It generally takes five to seven business days for Indiana's Secretary of State to process your formation paperwork by mail, a few hours online, and one day in person.

The IRS will also take about four weeks to process your EIN via mail, but may be able to process it immediately if you file online. The Retail Merchants Certificate that many businesses need to start operating also takes about seven to 10 days to process.

How do I correct filing errors in IN?

Correct filing errors for an Indiana LLC by filing articles of correction with the Secretary of State, Business Services Division either online or by mail. The filing fee is $20 online—plus a processing fee—or $30 by mail.

To file online, log into your INBiz account, go to the “Online Services” tab, and select “Business Amendment." Then, search your entity’s name in the search box, click “next,” and fill in the online amendment. To file by mail, send your form along with a check payable to the Secretary of State to the following address:

Business Services Division
302 W. Washington St., E-018
Indianapolis, IN 46204

How do I dissolve an LLC in Indiana?

Dissolve your LLC in Indiana in the same way that you would file corrections, either online or by mail through the Secretary of State for a filing fee of $20 online or $30 by mail. If you file by mail, submit one original and one copy to the SOS with a check or money order payable to the Secretary of State at the address listed above.

LegalZoom also offers a business dissolution service that can help ensure that your articles are filed accurately. This process avoids future fees or taxes that could arise from mistakes made during the filing process. Once filed, we’ll send your Certificate of Dissolution in the mail.

Rudri Bhatt Patel contributed to this article.